Finding the Best Home Loan Rates
Last updated on March 2nd, 2022
When choosing a home loan, you have to know how much deposit and monthly repayment you can make. On top of this, you also need to consider other upfront costs when buying a property, such as stamp duties. In short, you should know exactly how much you can afford.
How can you find the best home loan deal?
When searching for the perfect home loan, you need to look at rates, fees and features.
- Always look for the lowest rate.
When talking about home loans, a low rate is always best. The interest rate will determine your loan cost, so a lower rate means you will pay less interest each month. When searching for the best home loan deal, the interest rate is always where a borrower starts to look. Keep in mind that even a 0.5% difference in interest rate could save you thousands of dollars in the long run.
- Steer clear of hefty fees.
Fees, no matter how small they seem, all add up. When you’re hit with multiple fees on your home loan, it will probably cost you more than you’re prepared to pay. For example, some home loans charge an annual or ongoing monthly fee on top of application or settlement fees and other upfront fees. It is better to avoid these fees, however minimal if you can. You can check a home loan’s comparison rate to see the added cost of fees.
- Choose the correct type of loan that suits your needs.
Knowing the right type of loan that suits your needs and strategy is crucial. As a property investor, you won’t be able to apply for an owner-occupier loan because what you need is an investment loan.
You also need to consider and give your repayment type some thought. Going for a principal and interest loan is the safest way for most borrowers. This is where you borrow money and repay it plus interest each month, or whatever your repayment frequency may be. This type of home loan lets you pay off your loan faster.
Another type of loan you can consider is the interest-only loan, where you only pay the interest charges first and then the full amount later. Though this will cost you less in the short term, you will be paying more in the long run. Most property investors prefer this option, although some home buyers also choose this.
- Look for these home loan features.
These added features can offer you more flexibility when making repayments and managing your home loan in general.
- Offset accounts can help you reduce your interest repayments.
- Home loan packages let you bundle your mortgage with credit cards, transaction accounts and other financial products. Though they provide convenience and discounts, these package loans usually come with a hefty annual fee.
- Redraw facilities allow you to take out extra money that you have repaid to use in emergencies.
- Loan portability allows you to transfer your home loan from one property to another without refinancing.
- Choose only ‘must-have’ features.
When it comes to added features of your home loan, think ‘must-have’ rather than ‘nice to have.’ Some home loans offer extra features that you don’t really need. Instead of paying for these features that you don’t use, you’ll be better off choosing a basic home loan with limited but useful features.
Compare home loans to find the best deal.
Now that you are armed with all this knowledge, you should take the next step to find the best home loan deal. Comparing products and lenders allows you to scrutinise them before you make a decision. With Makes Cents, you can compare more than 25 providers, so you aren’t limited to just a few options. Make a comparison today and find your best home loan deal.
